(LEAD) S. Korea to introduce ‘one-strike-out’ system against illegal stock trading

(ATTN: RECASTS lead with more info; ADDS details, comments throughout, additional photo) SEOUL, July 9 (Yonhap) -- South Korean authorities will implement a "one-strike-out" rule targeting illegal stock trading and establish a joint inspection team to be tasked with enhanced monitoring and swift investigation of suspected cases, officials said Wednesday. They are part of comprehensive measures announced jointly by the Financial Services Commission (FSC), the Financial Supervisory Service (FSS) and the Korea Exchange (KRX) to tackle illegal stock transactions, which, in turn, is expected to boost the appeal of the local stock market to offshore investors. "We will enforce a 'one-strike-out' policy against unfair trading practices, including illegal short-selling, and thoroughly remove stock manipulators from the market by promptly suspending payments from suspected accounts, imposing fines exceeding the amount of criminal proceeds and barring perpetrators from trading financial investment products," FSC official Lee Yoon-soo told a press briefing. This photo taken on July 8, 2025, shows a dealing room of Hana Bank in Seoul. (Yonhap) Under the new enforcement scheme, the financial authorities will initiate payment suspension procedures when accounts used for illegal activities are identified during the investigation stage, in order to prevent suspects from transferring illicit profits. Those caught for illegal activities will face fines of up to twice the amount of their unjust gains. Stock manipulators will be barred from the capital market for up to five years through restrictions on trading financial investment products and disqualification from serving as executives at listed companies. Major shareholders and executives involved in illegal or unfair trading cases will be publicly named shortly after a resolution by the Securities and Futures Commission under the financial regulator, effectively removing them from the market both institutionally and socially. "The combination of monetary sanctions and non-monetary penalties effectively constitutes a one-strike-out policy for stock manipulators in the capital market," Lee said. The three agencies will also establish a joint task force at the KRX to enhance the initial response capabilities. Currently, responsibilities for responding to unfair trading are fragmented across several institutions, leading to delays in effective enforcement. "We will work to shorten the review and investigation process, which has typically taken up to two years, to around six to seven months," Lee said. "By streamlining these procedures, we aim to firmly establish the perception that stock manipulators will inevitably face justice." The joint task force is a temporary body, and authorities plan to operate it for about a year before considering whether to extend it or transition it into a permanent organization similar to the U.S. Securities and Exchange Commission (SEC), the official added. This undated image, provided by Yonhap News TV, depicts stock manipulation. (PHOTO NOT FOR SALE) (Yonhap) The bold moves come after President Lee Jae Myung called for market reform measures. Since Lee's election victory last month, the benchmark Korea Composite Stock Price Index (KOSPI) has rallied amid hopes for political stability and market-friendly policies. On June 20, the index surpassed the 3,000-point mark for the first time in more than three years and has since hovered around the 3,100 level. On Tuesday, it closed at 3,114.95. The new president has vowed efforts to usher in a "KOSPI 5,000 era." To this end, the government also plans to revise relevant regulations to enable authorities to conduct market surveillance based on individuals rather than accounts. The current account-based system results in excessive monitoring and makes it difficult to detect links between accounts held by the same individual. The new approach is expected to reduce the number of subjects under analysis by approximately 39 percent, significantly improving efficiency, according to the officials. The authorities also decided to strengthen listing maintenance requirements and streamline the delisting process for underperforming companies, the officials said. graceoh@yna.co.kr(END)

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(ATTN: RECASTS lead with more info; ADDS details, comments throughout, additional photo)

SEOUL, July 9 (Yonhap) — South Korean authorities will implement a “one-strike-out” rule targeting illegal stock trading and establish a joint inspection team to be tasked with enhanced monitoring and swift investigation of suspected cases, officials said Wednesday.

They are part of comprehensive measures announced jointly by the Financial Services Commission (FSC), the Financial Supervisory Service (FSS) and the Korea Exchange (KRX) to tackle illegal stock transactions, which, in turn, is expected to boost the appeal of the local stock market to offshore investors.

“We will enforce a ‘one-strike-out’ policy against unfair trading practices, including illegal short-selling, and thoroughly remove stock manipulators from the market by promptly suspending payments from suspected accounts, imposing fines exceeding the amount of criminal proceeds and barring perpetrators from trading financial investment products,” FSC official Lee Yoon-soo told a press briefing.

This photo taken on July 8, 2025, shows a dealing room of Hana Bank in Seoul. (Yonhap)

Under the new enforcement scheme, the financial authorities will initiate payment suspension procedures when accounts used for illegal activities are identified during the investigation stage, in order to prevent suspects from transferring illicit profits.

Those caught for illegal activities will face fines of up to twice the amount of their unjust gains.

Stock manipulators will be barred from the capital market for up to five years through restrictions on trading financial investment products and disqualification from serving as executives at listed companies.

Major shareholders and executives involved in illegal or unfair trading cases will be publicly named shortly after a resolution by the Securities and Futures Commission under the financial regulator, effectively removing them from the market both institutionally and socially.

“The combination of monetary sanctions and non-monetary penalties effectively constitutes a one-strike-out policy for stock manipulators in the capital market,” Lee said.

The three agencies will also establish a joint task force at the KRX to enhance the initial response capabilities.

Currently, responsibilities for responding to unfair trading are fragmented across several institutions, leading to delays in effective enforcement.

“We will work to shorten the review and investigation process, which has typically taken up to two years, to around six to seven months,” Lee said. “By streamlining these procedures, we aim to firmly establish the perception that stock manipulators will inevitably face justice.”

The joint task force is a temporary body, and authorities plan to operate it for about a year before considering whether to extend it or transition it into a permanent organization similar to the U.S. Securities and Exchange Commission (SEC), the official added.

This undated image, provided by Yonhap News TV, depicts stock manipulation. (PHOTO NOT FOR SALE) (Yonhap)

The bold moves come after President Lee Jae Myung called for market reform measures.

Since Lee’s election victory last month, the benchmark Korea Composite Stock Price Index (KOSPI) has rallied amid hopes for political stability and market-friendly policies.

On June 20, the index surpassed the 3,000-point mark for the first time in more than three years and has since hovered around the 3,100 level. On Tuesday, it closed at 3,114.95.

The new president has vowed efforts to usher in a “KOSPI 5,000 era.”

To this end, the government also plans to revise relevant regulations to enable authorities to conduct market surveillance based on individuals rather than accounts.

The current account-based system results in excessive monitoring and makes it difficult to detect links between accounts held by the same individual. The new approach is expected to reduce the number of subjects under analysis by approximately 39 percent, significantly improving efficiency, according to the officials.

The authorities also decided to strengthen listing maintenance requirements and streamline the delisting process for underperforming companies, the officials said.

graceoh@yna.co.kr
(END)